January 30, 2011

- This paper examines how key characteristics of the underlying wind and solar resources may impact on their energy value within the Australian National Electricity Market (NEM). Analysis has been performed for wind generation using half hour NEM data for South Australia over the 2008-9 financial year. The potential integration of large scale solar generation has been modelled using direct normal solar radiant energy measurements from the Bureau of Meteorology for six sites across the NEM.

- As traditionally conducted, benefit-cost analysis is rooted in neoclassical welfare economics, which assumes that individuals act rationally and are primarily motivated by self-interest, making decisions that maximize their own well-being. Its conduct is now evolving to reflect recent work in behavioral economics, which integrates psychological aspects of decisionmaking. We consider several implications for analyses of social programs. First, benefit-cost analysis often involves valuing nonmarket outcomes such as reductions in health and environmental risks. Behavioral research emphasizes the need to recognize that these values are affected by psychological as well as physical attributes. Second, benefit-cost analysis traditionally uses exponential discounting to reflect time preferences, while behavioral research suggests that individuals’ discounting may be hyperbolic.

- An analysis of the global oil market fundamentals indicates that a severe oil crunch could be in the offing probably by 2015 or thereabouts. By 2012, global oil production surplus capacity could entirely disappear if the global economy continues to grow and by 2015 the shortfall in oil output could reach nearly 10 million barrels a day (mbd) causing a severe oil crunch and pushing the oil price to levels matching if not exceeding the price levels reached in July 2008, namely $147/barrel. And while it is difficult to predict precisely what economic, political and strategic effects such a shortfall might produce, it would surely, at best, lead to periods of harsh economic adjustment in the global economy and, at worst, to conflict and even war should one of the major oil consumer nations choose to intervene forcefully.

- Unintended consequences of a pre-announced climate policy have been studied in a variety of situations. We show that early announcement of a carbon tax gives rise to a "Green-Paradox", in that it increases polluting emissions in the interim period (between announcement and actual implementation), irrespective of the scarcity of fossil fuels. The phenomenon holds both when the announced implementation date is taken as a credible threat and when households are skeptical about the (political) will or capability of the government to implement the policy as announced.

- This article explores the principles that should guide efforts to raise finance for climate action in developing countries. The main conclusions are that, first, there is an important role for private finance, which would be facilitated by having pervasive and broadly uniform emissions pricing around the world. Second, public finance is warranted by a range of market - and policy - failures associated with climate change and its mitigation. Third, raising tax revenues may be preferable to borrowing as a means of raising public finance, although the economics is not clear-cut.

- The effects of climate change have been and will be worse in poor countries and small-island states, those least able to adapt to the climate-related disasters. In this paper, senior fellow David Wheeler quantifies and makes available in an accompanying database the vulnerability of 233 countries to three major effects of climate change (weather-related disasters, sea-level rise, and reduced agricultural productivity). He develops a methodology for donors and other to craft cost-effective assistance for climate adaptation which can be applied easily and consistently to all 233 states and all three problems, or to any subset. The paper includes two sample applications: assistance for the 20 island states that are both small and poor to adapt to sea-level rise and general assistance for all low-income countries to adapt to extreme weather changes, sea-level rise, and reduced agricultural productivity.

- Earlier research has shown that adding wind capacity to a network can lower the total annual operating cost of meeting a given pattern of loads by displacing conventional generation. At the same time, the variability of wind generation and the need for higher levels of reserve generating capacity to maintain reliability standards impose additional costs on the system that should not be ignored. The important implication for regulators is that the capacity payments for eachMW of peak system load is now much higher. Hence, the economic benefits to a network of using storage, controllable load and other mechanisms to reduce the peak system load will be higher with high penetrations of wind generation. These potential benefits are illustrated in a case study using a test network and a security constrained OPF with endogenous reserves (SuperOPF).

- Using a discrete choice approach, this paper aims at deriving factors which increase the willingness to pay (WTP) for energy efficiency in an upcoming move. A multinominal logit model is used to analyse micro data of a survey among German households. The estimation results suggest that the WTP is not mainly determined by socioeconomic attributes like household income or formal education, but rather by environmental concerns and energy awareness. Although there is evidence for similarities to research on WTP for green daily consumer goods, the building sector is not clearly perceived as an essential possibility to contribute to climate protection.

- Scaling-up adoption of renewable energy technology, such as solar home systems, to expand electricity access in developing countries can accelerate the transition to low-carbon economic development. Using a purposely collected national household survey, this study quantifies the carbon and distributional benefits of solar home system programs in Bangladesh.

- This paper explores the near-term effects on household expenditures of legislative cap-and-trade proposals that restrict greenhouse gas emissions. We evaluate optimistic and pessimistic assumptions about the uses of allowance value, compared to relatively predictable results from a cap-and-dividend approach. We find the allocation of emissions allowances is significantly more important to distributional outcomes than the initial costs or regional variation of costs. Older households-age 65 and older-incur relatively less cost than other age groups due to automatic inflation indexing of Social Security. The largest burden as a percentage of income falls on middle-income households, which receive neither low-income rebates nor value through ownership of capital stock.

- We find that households living in California homes built in the 1960s and 1970s had high electricity consumption in 2000 relative to houses of more recent vintages because the price of electricity at the time of home construction was low. Homes built in the early 1990s had lower electricity consumption than homes of earlier vintages because the price of electricity was higher. The elasticity of the price of electricity at the time of construction was -0.22. As homes built between 1960 and 1989 become a smaller share of the housing stock, average household electricity purchases will fall.

- We study the effect of countries’ energy abundance on trade and sector activity, conditional on sector’s energy intensity, using an unbalanced panel with 14 high-income countries from Europe, America and Asia, 10 broad sectors, and years 1970-1997. We find that energy is a major driver for sector location through specialisation. We show that capital and energy are complements in the production function and use various controls in our analysis. The results give insights into delocalisation effects that may take place among rich countries with heterogeneous energy policy.

- The future consequences of climate change are highly uncertain. Today, the exact size of possible future damages are widely unknown. Governments try to cope with these risks by investing in mitigation and adaptation measures. In contrast to the existing literature, we explicitly model the decision of risk-averse governments on mitigation and adaptation policies. Furthermore we also consider the interaction of the two strategies.

January 23, 2011

- This paper uses a dynamic, spatial, multi-market equilibrium model, Biofuel and Environmental Policy Analysis Model (BEPAM), to estimate the effects of these policies on cropland allocation, food and fuel prices, and the mix of biofuels from corn and cellulosic feedstocks over the 2007-2022 period. We find that the biofuel mandate will increase corn price by 24%, reduce the price of gasoline by 8% in 2022, and increase social welfare by $122 B (0.7%) relative to Business As Usual scenario.

- Biofuels have received a lot of attention as a substitute for gasoline in transportation. They have also been blamed for recent increases in food prices. Both the United States and the European Union have adopted mandatory blending policies that require a sharp increase in the use of biofuels. In this paper, we examine the effect of these mandates on food prices and carbon emissions. The model we use considers future world population growth and income-driven changes in dietary preferences towards higher meat and dairy consumption as well as heterogenous land quality.

- This paper focuses on the domestic energy policies of indu1strialised states and, in particular, those states which have been at the forefront in applying neo-liberal policies to the reform and restructuring of their energy supply industries. It examines the interactions between the neo-liberal and climate change mitigation agendas, as they have been applied to energy policy, and the consequences these interactions are having for energy security, which is a core objective of energy policy for all states. A case study approach is taken using the United Kingdom and Australia as examples.

- This paper shows that tradable emissions permits and an emissions tax have a risk-related technology choice effect. We first examine the first- and second-order moments in the probability distributions of optimal abatement and production under the two instruments. The two instruments will, in general, lead to different expected aggregate production levels when technology choice is endogenous, given that regulation is designed to induce equal expected aggregate emissions. Moreover, either regulatory approach may induce larger variance in optimal production and optimal abatement levels, depending on the specification of the stochastic variables.

- This paper gives an assessment of the state of the finance negotiations under the Ad-hoc Working Group on Long-term Cooperative Action (AWG-LCA) of the UN Framework Convention on Climate Change (UNFCCC). The UN climate change conference in the Chinese town of Tianjin (2-9 October 2010) was the final preparatory UN meeting for the 16th annual UN Conference of Parties (COP-16) held in Cancún, Mexico in December 2010. The aim of this paper is to assess how the momentum achieved in Tianjin can be harnessed to deliver the sort of outcomes required for a comprehensive deal.

- This is a review paper intended to provide an overview of debates relating to BECCS or bio-CCS, which are alternative terms for the coupling of bioenergy with carbon capture and storage (CCS). In theory, BECCS has the potential to help draw the atmospheric CO2 concentration below present levels, or at least to contribute to its reduction. Yet while BECCS enthusiasts have drawn support from scenarios of large scale global bioenergy supply and the co-option of this into BECCS systems, the assumptions of accessible CCS capture, pipeline and storage infrastructure and that large scale bioenergy supply can be reconciled with competing uses of land (and water) are both uncertain.

- Carbon derivatives could have a strong positive effect in multiplying resources. At the same time they are also a strong transmission mechanism to concentrate risks into banks and back to non-financial actors. However, in the current European Emission Trading Scheme (EU ETS) carbon derivatives provide private sector decision-makers with inconsistent signals and are economically costly. The high volatility observed is not inherent in this kind of instrument, but is rather due to the lack of policy towards the development of an efficient carbon derivatives market and the absence of a standard pricing tool.

- Since the early 1970s, electricity consumption per capita in California has stayed nearly constant, while rising steadily for the US as a whole. I use empirical data to estimate the fraction of the difference between California and the United States owing to policy independent characteristics such as climate, industry structure or demographics, and the residual fraction that may be due to policy measures aimed at saving energy. I analyze historical trends in the commercial, industrial and residential sectors using aggregate survey statistics from various sources.

- This paper analyses a set of policy instruments designed to support investment during the learning phase of CCS technology, following the demonstration stage. The focus is on specific barriers to learning investment during early-commercial deployment. We analyze imperfections in the carbon price signal and market failures from barriers to large-sized innovative technology, which justify support during the learning investment phase and the initial roll out of CCS in electricity generation. Then we analyze and compare the efficiency of different ways to help CCS technology cross the so-called "death valley".

January 16, 2011

- The impacts of global change, including environmental changes, pose increasing risks for people around the globe. In this context, we developed and applied a methodology to quantitatively assess the extent to which specific groups of people are vulnerable to losing their livelihoods. The methodology has been applied to the following four patterns of vulnerability: smallholder farming in dryland areas, overexploitation of natural resources, competition over land for food and biofuels, and rapid urbanisation in coastal areas.

- This paper investigates the effects of climate-induced rising of ocean temperature on the optimal fishing policies in a two players non-cooperative game setting. We compare reactive management, under which the manager does not believe in or know about temperature trend, with proactive management where the manager considers the future temperature change in his decisions. We assume that the fish stock is initially solely owned by country one. As temperature rises, the stock starts spilling over to the zone of the other country and eventually becomes under its sole ownership. A stochastic dynamic programming model is developed to identify Nash management strategies for the two players.

- This paper attempts to empirically test the effect that wind power production in Denmark has on volatility of the nordpool wholesale electricity prices. The main result is that wind power tends to significantly reduce intraday volatility but increases volatility over larger time windows. The negative elasticity for intraday volatility is likely due to a larger-in-magnitude price effect of wind power on peak hours then off-peak hours. I suggest that this in turn is due to a steeper supply schedule at peakloads. The positive elasticities in the wider time windows can be intuitively explained by the greater variability of the supply when large amounts of wind power are present. These finding have ramifications for investment in power generation, balancing as well as transmission capacity.

- One of the goals of transport policy in Sweden is to minimize the impact from transport on the environment. Using a database consisting of over 800 rail, road and maritime transport infrastructure projects, we estimate whether environmental factors, such as negative environmental effects arising from the project (noise and barrier effects), or emissions of five pollutants (NOx, VOC, CO2, SO2 and PM) affect the choice of which projects will be built. For a broader model including all three transport modes, we find that projects that cause negative environmental effects in fact have a greater probability of being included in the National or a Regional Transport Infrastructure Plan for 2010-2021.

- This paper examines the development of carbon dioxide emissions in Sweden, especiallyn with a focus on the absolute reductions during the post-war period, during the 1970s and 1980s. The paper shows that the largest reductions were achieved before the introduction of an active climate policy in 1991. This was in turn the result of significant improvements in energy efficiency and energy conversion, while structural changes were considerably less important.

- In the context of extreme climate change, we ask how to conduct expected utility analysis in the presence of catastrophic risks. Economists typically model decision making under risk and uncertainty by expected utility with constant relative risk aversion (power utility); statisticians typically model economic catastrophes by probability distributions with heavy tails. Unfortunately, the expected utility framework is fragile with respect to heavy-tailed distributional assumptions. We specify a stochastic economy-climate model with power utility and explicitly demonstrate this fragility. We derive necessary and sufficient compatibility conditions on the utility function to avoid fragility and solve our stochastic economy-climate model for two examples of such compatible utility functions.

- We advance an original assumption according to which a good state of the environment positively affects the productivity of labor in R&D, so that a deteriorating environmental quality negatively impacts R&D. We study the implications of this assumption for the optimal solution in a model of growth based on R&D, where the use of a non-renewable resource generates pollution. It is shown that it is socially optimal to postpone extraction, as compared to the case with no effect of the environment on productivity in R&D.

- This paper studies an optimal endogenous growth model using physical capital, labor and two kinds of natural resources in the final goods sector and employing labor to accumulate knowledge. Based on results in calculus of variations, a direct proof of existence of optimal solution is provided. Analytical solutions for the planner case and the balanced growth paths are found for a specific CRRA utility and Cobb-Douglas production function. Transitional dynamics to the steady state from the theoretical model are used to derive three convergence equations of output intensity growth rate, exhaustible resource growth rate and renewable growth rate, which are tested based on data on production and energy consumption in 27 OECD countries.

- Regulating common-pool resources is welfare enhancing for society but not necessarily for all users who therefore may oppose regulations. We examine the short-term impact of common-pool resource regulations on welfare distribution. Market-based regulations such as fees and subsidies or tradable quotas achieve a higher reduction of extraction from free-access than individual quotas with the same proportion of betteroff users. They make also more users better-off for the same resource preservation. The quota regulation has attractive fairness properties: it reduces inequality while still rewarding the more efficient users.

- We consider the problem of regulating an economy with environmental pollution. We examine the distributional impact of the polluter-pays principle which requires that any agent compensates all other agents for the damages caused by his or her (pollution) emissions. With constant marginal damages we show that regulation via the polluter-pays principle leads to the unique welfare distribution that assigns non-negative individual welfare and renders each agent responsible for his or her pollution impact. We extend both the polluter-pays principle and this result to increasing marginal damages due to pollution. We also discuss the acceptability of the polluter-pays principle and compare it with the Vickrey-Clark-Groves mechanism.

- We show how leakage differs, depending on the biofuel policy and market conditions. Carbon leakage is shown to have two components: a market leakage effect and an emissions savings effect. We also distinguish domestic and international leakage and show how omitting the former like the IPCC does can bias leakage estimates. International leakage is always positive, but domestic leakage can be negative. The magnitude of market leakage depends on the domestic and foreign gasoline supply and fuel demand elasticities, and on consumption and production shares of world oil markets for the country introducing the biofuel policy.

- With its commitment to double the share of renewable fuels in electricity generation to at least 30% by 2020, the German government has embarked on a potentially costly policy course whose public support remains an open empirical question. Building on household survey data, in this paper we trace peoples‘ willingness-to-pay (WTP) for various fuel mixes in electricity generation, and capture preference heterogeneity among respondents using random parameter techniques. Albeit people‘s WTP for a certain fuel mix in electricity generation is positively correlated to the renewable fuel share, our results imply that the current surcharge effectively exhausts the financial scope for subsidizing renewable fuels.

- This paper provides high-resolution estimates of the global potential and cost of utility-scale photovoltaic and concentrating solar power technologies and uses a spatially explicit model to identify deployment patterns that minimize the cost of greenhouse gas abatement. A global simulation is run with the goal of providing 2,000 TWh of solar power in 2030, taking into account least-cost siting of facilities and transmission lines and the effect of diurnal variation on project profitability and required subsidies. The American southwest, Tibetan Plateau, Sahel, and Middle East are identified as major supply areas.

- This paper presents a Welfare model in the context of a global carbon market with uncertain information. The objective is to analyse whether a global carbon market could achieve a fair distribution of resources and risks in the framework of four sets of energy and climate scenarios at 2030 and 2100 time horizons. The agents in the model are households, firms, and a public institution.

January 9, 2011

- Notches --- where small changes in behavior lead to large changes in a tax or subsidy --- figure prominently in many policies, but have been rarely examined by economists. In this paper, we analyze a class of notches associated with policies aimed at improving vehicle fuel economy. We provide several pieces of evidence showing that automakers respond to notches in fuel economy policy by precisely manipulating fuel economy ratings so as to just qualify for more favorable treatment. We then describe the welfare consequences of this behavior and derive a welfare summary statistic applicable to many contexts.

- This paper is a follow up of the SECURE-project, financed by the European Commission to study "Security of Energy Considering its Uncertainties, Risks and Economic Implications". It addresses the perspectives of, and the obstacles to a CCTS-roll out, as stipulated in some of the scenarios. Our main hypothesis is that given the substantial technical and institutional uncertainties, the lack of a clear political commitment, and the available alternatives of low-carbon technologies, CCTS is unlikely to play an important role in the future energy mix; it is even less likely to be an "energy bridge" into a low-carbon energy future.

- We use a two-period model to investigate intertemporal effects of cost reductions in climate change mitigation technologies for the power sector. With imperfect climate policies, cost reductions related to carbon capture and storage (CCS) may be more desirable than com-parable cost reductions related to renewable energy. The finding rests on the incentives fossil resource owners face. With regulations of emissions only in the future, cheaper renewables speed up extraction (the ‘green paradox’), whereas CCS cost reductions make fossil resources more attractive for future use and lead to postponement of extraction.

- This paper treats programs in which firms voluntarily agree to meet environmental standards as "green clubs": clubs, because they provide non-rival but excludable reputation benefits to participating firms; green, because they also generate environmental public goods. The model illuminates a central tension between the congestion externality familiar from conventional club theory and the free-riding externality familiar from the theory on private provision of public goods.

- This paper develops a theory of voluntary provision of a public good in which a household’s decision to engage in a form of environmentally friendly behavior is based on the desire to offset another behavior that is environmentally harmful. The model generates predictions about (1) participation in a green-electricity program at the extensive and intensive margins, and (2) changes in electricity consumption in response to participation. We test the theory using billing data for participants and nonparticipants in a green-electricity program in Memphis, Tennessee.

- Just prior to the Copenhagen climate summit, China pledged to cut its carbon intensity by 40-45% by 2020 relative to its 2005 levels to help to reach an international climate change agreement at Copenhagen or beyond. This raises the issue of whether such a pledge is ambitious or just represents business as usual. To put China’s climate pledge into perspective, this paper examines whether this proposed carbon intensity goal for 2020 is as challenging as the energy-saving goals set in the current 11th five-year economic blueprint, to what extent it drives China’s emissions below its projected baseline levels, and whether China will fulfill its part of a coordinated global commitment to stabilize the concentration of greenhouse gas emissions in the atmosphere at the desirable level.

- Nowadays, as stressed by important strategic documents like for instance the 2009 EU White Paper on Adaptation or the recent 2009 "Copenhagen Accord", it is amply recognized that both mitigation and adaptation strategies are necessary to combat climate change. This paper enriches the rapidly expanding literature trying to devise normative indications on the optimal combination of the two introducing the role of catastrophic and spatial uncertainty related to climate change damages. Applying a modified version of the Nordhaus’ Regional Dynamic Integrated Model of Climate and the Economy it is shown that in both cases uncertainty works in the direction to make mitigation a more attractive strategy than adaptation.

- This paper presents an overview of the economics literature on the effect of Corporate Average Fuel Economy (CAFE) standards on the new vehicle market. Since 1978, CAFE has imposed fuel economy standards for cars and light trucks sold in the U.S. market. This paper reviews the history of the standards, followed by a discussion of the major upcoming changes in implementation and stringency. It describes strategies that firms can use to meet the standards and reviews the CAFE literature as it applies to the new vehicle market. The paper concludes by highlighting areas for future research in light of the upcoming changes to CAFE.

- This study analyzes the long-term impacts of large-scale expansion of biofuels on land-use change, food supply and prices, and the overall economy in various countries or regions using a global computable general equilibrium model, augmented by a land-use module and detailed representation of biofuel sectors. The study finds that an expansion of global biofuel production to meet currently articulated or even higher national targets in various countries for biofuel use would reduce gross domestic product at the global level; however, the gross domestic product impacts are mixed across countries or regions.

- This paper proposes a definition of the cost of a disaster, and emphasizes the most important mechanisms that explain and determine this cost. It does so by first explaining why the direct economic cost, that is, the value of what has been damaged or destroyed by the disaster, is not a sufficient indicator of disaster seriousness and why estimating indirect losses is crucial to assess the consequences on welfare. The paper describes the main indirect consequences of a disaster and the following reconstruction phase, and discusses the economic mechanisms at play. It proposes a review of available methodologies to assess indirect economic consequences, illustrated with examples from the literature. Finally, it highlights the need for a better understanding of the economics of natural disasters and suggests a few promising areas for research on this topic.

- The residential building sector is a major emitter of the greenhouse gas carbon dioxide (CO2) due to the high energy demand for electricity and heating, particularly in industrialised countries. In order to know house owners' preferences on heating and insulation technologies and to learn more about their decisions we conducted a choice experiment concerning energy retrofits for existing houses in Germany. In the experiment, participating house owners could either choose a modern heating system or an improved thermal insulation for their house. Unlike previous studies, we explicitly included both cost and environmental benefits of energy-saving measures. In particular, we find environmental benefits to have a significant impact on choices of heating systems.

- This paper analyses a framework for designing robust decisions against uncertain threats to public goods generated by multiple agents. The agents can be intentional attackers such as terrorists, agents accumulating values in flood or earthquake prone locations, or agents generating extreme events such as electricity outage and recent BP oil spill, etc. Instead of using a leader-follower game theoretic framework, this paper proposes a decision theoretic model based on two-stage stochastic optimization (STO) models for advising optimal resource allocations (or regulations) in situations characterized by uncertain perceptions of agent behaviors.

- This monograph takes advantage of and expands on IFPRI’s cutting-edge climate modeling expertise to address the climate change threat in the context of larger food security challenges. It provides the most comprehensive analysis to date on the scope of climate change as it relates to food security, including who will be most affected and what policymakers can do to facilitate adaptation.

- Rebound effects measure the behaviorally induced offset in the reduction of energy consumption following efficiency improvements. Using both panel estimation and quantile-regression methods on household travel diary data collected in Germany between 1997 and 2009, this study investigates the heterogeneity of the rebound effect in private transport. With the average rebound effect being in the range of 57% to 62%, our results are in line with a recent German study by Frondel, Peterss, and Vance (2008), but are substantially larger than those obtained from other studies.

- Physics shows that energy is necessary for economic production and, therefore, economic growth but the mainstream theory of economic growth, except for specialized resource economics models, pays no attention to the role of energy. This paper reviews the relevant biophysical theory and mainstream, resource economics, and ecological economics models of growth. A possible synthesis of energy-based and mainstream models is presented.

- This note outlines a scheme for mobilizing financing to help developing countries confront the challenges posed by climate change. The idea is to create a “Green Fund” with the capacity to raise resources on a scale commensurate with the Copenhagen Accord ($100 billion a year by 2020). To achieve the necessary scale, the Green Fund would use an initial capital injection by developed countries in the form of reserve assets, which could include SDRs, to leverage resources from private and official investors by issuing low-cost "green bonds" in global capital markets.

January 2, 2011

- We develop a consistent and comprehensive theoretical framework for assessing whether economic growth is compatible with sustaining well-being over time. The framework focuses on whether a comprehensive measure of wealth - one that accounts for natural capital and human capital as well as reproducible capital - is maintained through time. Our framework also integrates population growth, technological change, and changes in health. We apply the framework to five countries that differ significantly in stages of development and resource bases: the United States, China, Brazil, India, and Venezuela.

- As natural disasters hit with increasing frequency, especially in coastal areas, it is imperative to better understand how much natural disasters affect economies and their people. This requires disaggregated measures of natural disasters that can be reliably linked to households, the first challenge this paper tackles. In particular, a methodology is illustrated to create natural disaster and hazard maps from first hand, geo-referenced meteorological data.

- By 2016, the Corporate Average Fuel Economy (CAFE) standard will increase by 40 percent from its current level, representing the first major increase in the standard since its creation in 1975. Previous analysis of the CAFE standard has focused on its short-run effects (1-2 years), in which vehicle characteristics are held fixed, or its long run effects (10 years or more), when firms can adopt new power train technology. This paper focuses on the medium run, when firms can choose characteristics such as weight and power, yet have only limited ability to modify current technology.

- Asymmetric climate policies are expected to distort the level-playing field regarding international trade, singularly to the detriment of small open economies. The paper develops a flexible method that provides essential input regarding the design of offsetting measures. It builds on input-output analysis and standard input-output data to provide proxies for both carbon-intensity and trade-intensity. These are used to reckon the impact that such policies like carbon taxation are expected to have on international competitiveness. The method is then applied to the case of Belgium.

- In this paper, we show that drought has a positive effect on the incidence of civil war over the 1945-2005 period in Sub-Saharan Africa. We use the Palmer Drought Severity Index which is a richer measurement of drought than the measures used in the literature (rainfall and temperature) as it measures the accumulation of water in the soil in taking into account the temperature and the geological characteristics of the soil. We show that the risk of civil war increases by more than 42% from a "normal" climate to an "extremely drought" climate. Surprisingly, only 2.5% of this effect is channeled through economic growth.

- We study the structural differences of climate change leading ‘actors’ such as Northern EU countries, and ‘lagging actors’ - southern EU countries and the ‘Umbrella group’ - with regard to long run (1960-2001) carbon-income relationships. Parametric and semi parametric panel models show that the groups of countries that were in the Kyoto arena less in favour of stringent climate policy, have yet to experience a turning point, though they at least show relative delinking in their monotonic carbon-income relationship. Northern EU instead robustly shows bell shapes across models, which seem to depend on time related (policy) events.

- Our histories depart somewhat from the bulk of the energy innovation policy literature in focusing attention on the role of vigorous competition - particularly entry - in stimulating innovation, suggesting that in several industries a mix of public policies - including procurement, antitrust and intellectual property protection - played an important role in stimulating innovation by encouraging extensive competition and entry by newly founded firms. There are, of course important differences between the industries profiled here and the energy sector, but we believe that exploring the potential of these kinds of innovation ecosystems in clean energy might be a fruitful avenue for future research.

- Manufacturing industries differ with respect to their energy intensity, labor-to-capital ratio and their pollution intensity. Across the United States, there is significant variation in electricity prices and labor and environmental regulation. This paper uses a regression discontinuity approach to examine whether the basic logic of comparative advantage can explain the geographical clustering of U.S. manufacturing. Using a unified empirical framework, we document that energy-intensive industries concentrate in low electricity price counties, labor-intensive industries avoid pro-union counties, and pollution-intensive industries locate in counties featuring relatively lax Clean Air Act regulation. We use our estimates to predict the likely jobs impacts of regional carbon mitigation efforts.

- This paper develops and parameterizes an overarching analytical framework to estimate the welfare effects of energy efficiency standards applied to automobiles and electricity-using durables. We also compare standards with sectoral and economywide pricing policies. The model captures a wide range of externalities and preexisting energy policies, and it allows for possible "misperceptions" - market failures that cause underinvestment in energy efficiency.

- Previous literature finds that consumers tend to undervalue discounted future energy costs in their purchase decisions for energy-using durables. We argue that this finding could result from ignoring consumer heterogeneity in empirical analyses as opposed to true undervaluation. In the context of automobile demand, we show that, if not accounted for, consumer heterogeneity could lead to sorting, which in turn biases toward zero the estimate of marginal willingness to pay for discounted future fuel costs.

- We estimate residential electricity demand for different regions of the country, assuming that consumers respond to average electricity prices. We circumvent the need for individual billing information by developing a novel generalized method of moments approach that allows us to estimate demand based on household electricity expenditure data from the Consumer Expenditure Survey, which does not have quantity and price information.

- How should Tajikistan adapt to ongoing and future climate change, in particular given the many pressing development challenges it currently faces? The paper argues that for developing countries like Tajikistan, faster economic and social development is the best possible defense against climate change.

- Several indicative climate policy packages for 2020 have been found to result in mainly favourable co-impacts on Dutch air quality. The extent of their contribution to air quality does depend on the specific measures in the climate package. This report from the Dutch Policy Research Programme on Air and Climate provides insight into the co-impacts of climate measures on air quality.

- The timing, intensity and location of climate change impacts is not known to any degree of precision. Because most deterministic analyses and policy prescriptions ignore this uncertainty, their recommendations are likely to waste community resources. Applying real options thinking allows an incremental and flexible approach. Adaptation measures are implemented only as better knowledge becomes available over time. Several examples are given of real options in the Mekong Delta, with a comparison of net present values of two housing alternatives.

- Energy-related carbon dioxide (CO2) emissions are set to double by 2050 unless decisive action is taken. International Energy Agency (IEA) analysis demonstrates, however, that it is possible - in the same timeframe to 2050 - to reduce projected greenhouse-gas emissions to half 2005 levels, but this will require an energy technology revolution, involving the aggressive deployment of a portfolio of low-carbon energy technologies.

- Putting a price on greenhouse gas emissions is a cornerstone policy in climate change mitigation. To this end, many countries have implemented or are developing domestic emissions trading systems. This paper reviews key design features of mandatory emissions trading systems that had been established or were under consideration in 2010, with a particular focus on implications for the energy sector.